Bank earnings season has arrived, and there’s a lot more questions than usual.
Results will be parsed not just on whether the U.S. economy is about to head into a recession — the latest data hasn’t been great — but also how well banks have done in retaining deposits that otherwise are flowing into money-market funds, and how far the bonds they have bought have dropped in value as interest rates have climbed.
The Oakmark Fund , the value-focused fund with $15.5 billion in assets under management, highlighted one lender it recently bought: Truist Financial.
Truist TFC, +1.90%, fund manager Bill Nygren points out, is among the largest regional banks in the U.S., predominately focused in fast-growing southeastern markets. It hasn’t done great this year — its shares have dropped 21% on worries over mark-to-market losses as well as deposit outflows.
“We believe the company’s reputation, relationships and liquidity profile will allow it to weather this storm without material negative impact,” he says.
Truist, he argues, now trades at a single-digit multiple to its normalized earnings power. “We believe this is a very attractive price for such a high-quality regional banking franchise that has historically generated a high-teens return on its tangible equity,” he says. A bonus — its insurance brokerage subsidiary, which alone is worth as much as 35% of the current stock price based on a recently announced minority stake sale.
Truist will report results on Thursday.
Another company the fund picked up is very different: Kroger KR, -0.57%, the number-two grocer behind Walmart. While the market is worried that e-commerce will disrupt the traditional grocery business, Nygren said its store footprint, distribution infrastructure, technology investments and strong brand all position the company well for a world with higher online grocery adoption. He says Kroger trades at just 10 times its estimate of next year’s earnings per share, and the pending merger with Albertson’s has the potential to further boost scale advantages.
The markets
U.S. stock futures ES00, -0.07% NQ00, -0.50% were perched a bit lower after Thursday’s 383-point rally in the Dow Jones Industrial Average DJIA, +1.14%. The U.S. dollar DXY, +0.04% slipped.
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The buzz
Here come the earnings: JPMorgan Chase JPM, +0.38%, Citigroup C, +0.81%, Wells Fargo WFC, +1.20% and PNC Financial Services PNC, +1.43% are releasing results, alongside BlackRock BLK, +0.71% and UnitedHealth UNH, +0.97%.
JPMorgan shares climbed after stronger-than-forecast results, and Wells Fargo also beat estimates.
Data released after the close on Thursday showed that banks reduced their borrowing from two Federal Reserve backstop facilities, though it still was an elevated $139.5 billion.
Boeing BA, +0.59% shares slumped 5% as the company halted deliveries of its 737 MAX jet. Shares of Spirit AeroSystems SPR, -0.25%, which makes the Max fuselage, tumbled 12%.
U.S. retail sales highlights the end to a busy week on the economic calendar, with releases on import prices, industrial production, business inventories and consumer sentiment also on the docket. There’s also a speech from Fed Gov. Christopher Waller.
Japan has approved its first casino, that will be built by MGM Resorts MGM, +1.44% and Orix Corp. IX, +2.11%
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Top tickers
Here were the most active tickers on MarketWatch as of 6 a.m. Eastern.
| Ticker | Security name |
| INFY, -9.78% | Infosys |
| BUD, +1.51% | Anheuser-Busch InBev |
| TSLA, +2.97% | Tesla |
| AMC, +2.25% | AMC Entertainment |
| BBBY, -8.43% | Bed Bath & Beyond |
| GME, +1.30% | GameStop |
| CXAI, +345.63% | CXApp |
| AAPL, +3.41% | Apple |
| NVDA, -0.12% | Nvidia |
| NIO, +1.00% | Nio |
The chart
According to Bank of America, the U.S. dollar is in the fourth bear market of the past 50 years. Not only has the greenback dropped 11% since September, but gold GC00, -0.42% is over $2,000 and near a record, and bitcoin BTCUSD, +1.61% has rallied over $30,000. But pessimism is high right now, and 200 basis points of Fed cuts are priced in from June to the election, so look for the dollar to bounce after the Fed ends its rate-hike cycle on May 3, say strategists led by Michael Hartnett.
Random reads
Some $100,000 of dimes were stolen — though good luck to the thief or thieves trying to use them.
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